What is a loan scheme, and why you shouldn’t use one?
The contractor loan scheme is that a freelance or contract worker signs a contract of employment with an employer or employment benefit trust, usually located outside mainland UK jurisdiction. The employer then pays the contractor in the form of tax-free ‘loans’ – which, although appearing as loans on paper, are never expected to be repaid. In return, the scheme provider takes a percentage of the contractor’s income as an ‘administration fee’. Increase in contractor loan schemes, HMRC has taken determining…